Penetrating the Retail Sector in Bengal – the Reliance Juggernaut (Blog article, open for comments)

July 31, 2007

July 31, 2007

By Partho Sarathi Ray, Sanhati

The latest neo-liberal onslaught on the lives and livelihoods of working people in India is taking place in the retail sector. After agriculture, the retail sector employs the largest number of people in India. Of the 40 million people involved in retailing as an economic activity, 0.5 million are in organized retail whereas around 39.5 million people are employed in unorganized retail trade. This includes all sorts of small retailing operations ranging from neighbourhood “mom-and-pop” shops to street vendors to small farmers who travel to cities daily to sell their produce to the small-scale transporters who transport the retail goods. These 40 million adults in the retail sector roughly translates into 160 million dependents, making the retail sector the source of livelihood for approximately a sixth of India’s population. The decade of liberalization, which has seen stagnation in the agrarian economy and large scale job losses in the manufacturing sector, has pushed more and more people into different aspects of retailing in absence of any other opportunities.

On the other hand, the small but burgeoning middle class in India, with immense spending power compared to the vast majority of the poor people in the country, has been eyed for quite some time by both multinational corporations involved in the retail trade and by Indian corporations which want to enter the arena sensing it to be a source of huge profits. Walmart from USA, known for its hated business practices, Metro AG of Germany and Carrefour of France have all been trying to enter the Indian retail market. As the Indian government has still not allowed foreign direct investment (FDI) in the retail sector, Walmart is trying to enter the Indian market in a joint venture with Bharti, an Indian company.

Leading the charge among Indian corporations in this field is the Reliance Industries limited, which has opened a chain of retail stores called “Reliance Fresh” in most of the major cities in India. Other
Indian corporations that have gone into the retail sector are Bharti, ITC, Godrej, Big Bazaar and Subhiksha. Reliance has an ambitious agri-retail plan, variously described as “farm-to-table” or “field-to-fork” , whereby it will directly source produce from the fields, route it through its national distribution centres and bring it to the urban consumers in the ambience of air-conditioned stores displaying packaged produce under artificial illumination. Being able to handle large volumes and to absorb initial losses, they can sell cheap and therefore undercut the market, pushing small vendors and groceries out of business, as happened over most of USA. Once a monopoly is set up, they can increase prices at their will. On the other hand, by handling the entire supply chain, and probably by going into corporate farming in the near future, they will push numerous people involved in the production, procurement and transportation of retail goods out of their means of livelihood. This is
probably going to spell disaster for the large number of people employed in the retail sector.

As Reliance Fresh outlets started operating in a number of major cities, small-scale vegetable and fruit sellers started reporting reductions in sales by as much as 40% within a few days. Protests erupted in May in a number of cities such as Ranchi, Patna, Indore, Jaipur and Delhi. Protesters, mostly comprising of vegetable vendors and fruit sellers, picketed Reliance Fresh outlets or went on hunger strikes. The protests had turned violent in Ranchi and Indore, and the protesters were beaten up by the police. In Chennai (Madras), there was a protest march on May Day that proceeded from the wholesale Koyambedu market, which is suffering huge losses due to the opening of Reliance Fresh, to the Reliance Fresh shop, where the protestors were arrested. These protests by small retailers, to protect their livelihood and to prevent their being pushed into extinction, are spreading and need to be supported and organized into the general struggle against neo-liberal economic policies unfolding in India.

In West Bengal, ruled by the Left Front, led by the so-called Communist Party of India (Marxist) (CPIM), which is a darling of capitalists in India and abroad because of its abject surrender to all their demands, the situation is developing along a different trajectory. Reliance has been trying to enter the retail market in Bengal as a part of their Rs 25,000 crore national roll-out, but has been opposed not only by the people of the state but even by the non-CPIM parties in the Left Front. A major obstacle in their path has been the fact that the agriculture marketing department of the West Bengal government, which is the relevant authority in this sector, is controlled by a minister from the Forward Bloc, a junior partner in the government which is much closer to the people on this issue than the CPIM. To circumvent this obstacle, Reliance had tried to put a food-processing tag to its national distribution centres, as the food processing department is controlled by the CPIM. As this tussle
continued between the two parties in the Left Front, Reliance found another way to penetrate the market in West Bengal. The municipal corporation in the West Bengal state capital of Kolkata (Kolkata municipal corporation, KMC), controlled by the CPIM, declared in May that it was going to hand over a major market in the city, the Park Circus market, to Reliance on a ninety-nine year lease. This was part of a process in which bids had been called for renovating and rebuilding this 76-year old market located in a prime location in the city, for which Reliance had emerged as the highest bidder.

The same process is supposed to happen for all the KMC-owned markets of the city. These civic markets of Kolkata, referred to locally as “bazaars”, are not only the sources of livelihood for hundreds of thousands of people, they are also an organic part of the culture of this teeming city of millions. These are places where buyers and vendors directly interact with each other, and where farmers and fisher-folk from the outskirts of the city bring their produce, helping sustain the economy of the entire hinterland of Kolkata, one of the most densely populated areas in the world. In face of opposition in the KMC legislature, and from the agriculture marketing minister of the Forward Bloc who wanted the job of developing the civic markets to be transferred to the agriculture marketing board, Bikash Ranjan Bhattacharya, the CPIM mayor of the KMC, declared that Reliance would only be responsible for rebuilding and renovating the Park Circus market, not in using it for their retail trade. However, the proposal that was passed by a majority vote in the CPIM controlled KMC legislature states that Reliance “shall have the right of usage” of its portion for commercial purposes like “markets, offices, seminar halls, multiplexes, restaurants, entertainment hubs, etc, or for any other purpose as mutually agreed upon by the KMC and the private partner”.

According to the plan, 150,000 square feet of the renovated market will go to Reliance on a 99-year lease, whereas the rest 55,000 square feet will go to KMC and existing stall owners. This again seems to be a case of doublespeak by the CPIM, where the mayor declares that Reliance would not use the Park Circus market to get into the retail trade but the actual agreement with the company does not explicitly say so on paper.

When asked about the protests by the traders who have been carrying out their business in the Park Circus market for generations, the mayor is reported to have said “The traders have no right to oppose the civic body’s decision to hand over the Park Circus market to a private party. If they don’t accept our decision, they are free to carry on their trade somewhere else.

In addition, when reminded about the plight of small vendors, a large number of whom sell their stuff in and around the market, the mayor had to say “KMC is not responsible for the future of these vendors. They will have to fend for themselves once the new and improved market is constructed,” This portrays the callous disregard of the CPIM for the lives and livelihoods of these people who not only depend on this market as their source of income, but have also developed close, mutually helpful relationships with the regular buyers of the market.

The corporatization of Kolkata’s markets is another neo-liberal assault by the CPIM on the people of Bengal in the name of development. This would result in the handing of public assets, maintained on
tax-payers’ money and sustaining huge numbers of working people, on a platter to corporations. Opposition against it needs to be built up among all sections of the people, and the small traders and vendors who are at the receiving end of this policy, needs to be supported as part of the general struggle against capitalist development being thrust over the people of India. Another imperative is the proposition of alternative models for the solution of this issue.

It is plausible that the KMC is unable to maintain these markets out of its limited finances. The disturbing thing is that the only solution that is part of the dominant discourse is the handing over of these markets to private operators. The possibility that the small traders and retailers, who carry out their trade from the market, might be able to get together and mobilize finances to buy or lease out the market is not even being explored. This would not only prevent the wiping out of their source of livelihood, but would also make them stakeholders in it. Such alternative possibilities need to be constantly raised as part of the discourse in order to resist the neo-liberal policies being imposed by the CPIM in West Bengal.


6 Responses to “Penetrating the Retail Sector in Bengal – the Reliance Juggernaut (Blog article, open for comments)”

  1. LeftyProf Says:
    August 4th, 2007 at 20:26

    Hmm…. I’m curious. I commented on this post, and included a question about how I might get involved with Sanhati. The comment stayed up for a couple of days, and now has gone missing, mysteriously enough. Meantime, I haven’t heard back from the Sanhati folks regarding joining them, although I have tried to get in touch a couple of times at least. Why was my comment deleted? Why will they not respond to my questions about joining the group? This is certainly a curious way to build solidarity.

  2. admin Says:
    August 5th, 2007 at 02:12

    Hi – sorry your comment got deleted with all the spam I was clearing yesterday. I tried to get it back, but couldn’t.

    We did receive your mail, and read your blog with interest. A member will get in touch with you shortly.

    Thanks, and sorry for the confusion!

  3. Amitayus Says:
    August 22nd, 2007 at 11:10

    I am curious about one thing, when Pantaloon opened shoped in Kolkata there was no problem, same with Big Bazar, Bazar Kolkata, C3 and host of others. Now why suddenly this brouhahah over Reliance?
    Secondly lots are being said about the middlemen, but what about the farmers? Farmers who literally dump their produce in the open fields due to non-availablity of support price and whom the middlemen take for a ride? There is no stoarge facility nor any value addition chain. In the last 30 years either the Govt. of West Bengal or the traders have miserably failed to build up any. What if big capital now build up this necessary infrastructure? True, they will indeed exploit the farmers, but won’t the farmers get some basic price instead of their present suffering?

    Just my thought.

  4. Sankar Ray Says:
    August 24th, 2007 at 22:07

    I fully endorse the protest campaign against retail-colonialism. But I think we should have been alert several years ago, when Amway International entered India.
    In October 2004, I presented a paper on the freedom of press at the three day conference of South Asia Free Media Association in New Delhi. I am quoting from what I said about Amway.

    “Are we conscientiously ready to fight for the freedom of the press? Why don’t we write against the questionable way of sales and marketing by the Indian subsidiary of Amway? A couple of months before the last parliamentary polls , the company held a daylong meeting of its representatives at the Science City Auditorium. Two five-hour long promotional lectures and demonstrations were held for two batches of participants . Not even a cup of tea was served for anyone in the spacious hall even though the participants came all the way from different parts of the country at their cost (including travel food and lodging) plus a fee of Rs 500 each to the company. A few participants, mesmerized perhaps more than the Nazi youths in the Germany during the 1930s told me that a deaf and dumb participant was asked to the dais for generating monthly commission of Rs 25,000 a month. Comments are unnecessary.”

  5. Pratap Raychaudhuri Says:
    November 3rd, 2007 at 13:39

    Is this not trying to fight the inevitable?
    Maybe I should get ready for brickbats from sanhati rightaway…

  6. Tarjan Says:
    December 30th, 2007 at 07:27

    The same thing happenned when multiplexes arrived earlier they provide the facility ay 50Rs and then after eradicating competition they sell at more than 150Rs.
    Another thing is that numbers of traders benefitting from the set business from their ancestors which prevents new player from entry into that market. So the new giant company will give job to numerous small literate people of cities and simultneously it will give better price from less than 25 paise to atleast more than 1Rs to small vegetable and fruit farmers. And the remaining money will go to shareprices and companies corporate
    If we are against this then we should also be against every big company from colgate to computers. But actually everything works on basis of economics. If economics of traders are bigger then they will win otherwise economics will make win the corporates and farmers.
    politics is something which supports both depends on market condition

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